What is meant by Pledge? Describe its essential features.
Pledge is treated as special kind of bailment in which a movable thing is bailed as security for the repayment of a debt or for the performance of a promise. Pledge is also referred to as a pawn. The person who takes the loan is called the pledger or the pawnor. Where as the person with whom goods are pledged is called the pawnee or the pledgee. The pledgee is not passed the ownership of the pledged goods.
That is, it is with the pledger that the general property of the pledged goods remains, however, a special property in it is passed on to the pledgee. This special property is the right to the possession of the articles along with the power of sale on a default, and the property pledged should be delivered to the pledgee. In case where the possession of the goods is with a third party, who, on the direction of the pledger, consents to hold them on behalf of the pledgee is enough delivery. For example, a railway receipt is a document of title of the goods and a pledge of the receipt operates as a pledge of the goods.
Any of the following persons can make a valid pledge:
- The owner or his authorized agent, or
- One of the several co-owners, who is in the sole possession ‘of goods, with the consent of other owners, or
- A mercantile agent, who is in possession of the goods with the consent of real owner, or
- A person in possession under a voidable contract, before the contract is rescinded, or
- A seller, who is in possession of goods after sale or a buyer who has obtained possession of the goods before sale, or
- A person who has a limited interest in the property.